Romney, Man of Steel: attacks from the right on Romney completely off-base
This article here by John Hawkins put it over the top for me: what is up with all these people on the RIGHT attacking Romney?
Yeah, he's Mormon, but he's a solid Republican and would make a great President. What happens if Romney gets the nomination, are you guys going to retract what you said about him?
I'm going to debunk some of the ridiculous comments made in the article above and others, you can make up your own mind. In his article, John says:
"it had millions of dollars in debt forgiven by the FDIC in what could fairly be termed a bailout. The same goes for Bain making more than 15 million dollars on GS Technologies when "a federal government insurance agency had to pony up $44 million to bail out the company’s underfunded pension plan." That's not a liberal argument, it’s a prime example of the sort of "capitalism on the way up and socialism on the way down" that most Americans, including Tea Partiers, hated about TARP. Now, we're going to be asked to defend that as one of the wonders of the free enterprise system because Mitt Romney may be the nominee?"
Gosh, that sounds pretty bad! Well, let me tell you the real scoop. What he's talking about is Bain's ownership of GS Technologies, which is covered in depth by Reuters here. Even the title of "Special report: Romney's steel skeleton in the Bain closet" sounds ominous. Let's press on.
Here's the basic rundown of this:
Bain Capital in 1993 buys Grinding Systems steel mill, renames it GS Technologies.
In 1994 Bain issued bonds to upgrade plant and equipment, and Bain got a $36 million divided. "Paying distributions with debt is not uncommon," said Campbell Harvey, a finance professor at Duke University. "The only thing that strikes me as a bit unusual is the size of the dividend. There would be logic in them saving some cash for a downturn." So maybe it was a little high?
"At the time they paid that dividend, they felt that the financials justified it," Stutz said. So maybe it looked reasonable at the time.
"In 1995 Bain merged GS with another wire rod maker in Georgetown, South Carolina, to form one of the largest mini-mill steel producers in the U.S. The new company issued another $125 million in bonds to pay for the merger. Bain doubled down, reinvesting $16.5 million of its earlier dividend." Wait, they REINVESTED money back into the company? But, but, I thought Bain was just robbing the company blind? Why would they put money BACK into the company, unless... (gasp) they actually wanted to turn it around? Maybe?
"Contract talks foundered and the union went on strike in April 1997. The first standoff since 1959 quickly turned nasty. Workers shot bottle rockets at security guards, tossed nails in the roadways to flatten the tires of nonunion trucks and pounded on the windows of vehicles as they left the plant. After 10 weeks, the two sides reached a deal that boosted pensions and ensured that workers would get health and life insurance in the event of a shutdown."
You know, there might be something in that last sentence, but I can't put my finger on it. Let's proceed to the end:
"GS Industries declared bankruptcy on February 7, 2001, and said it would shut down the Kansas City plant, eliminating 750 jobs. "
"The U.S. Pension Benefit Guaranty Corp, which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million. The federal agency, funded by corporate levies, stepped in to cover the basic pension payments..."
That rotten, rotten Romney. He raided those poor steelworkers, just like John Hawkins says.
Oh, BTW, forgot these:
1 "In 1999 [Romney] left the business to run the Winter Olympics in Salt Lake City."
2 "Bain profited on the deal, receiving $12 million on its $8 million initial investment"
3 "Concerned about the level of debt, which totaled $378 million in 1995 "
4 "If you look at the steel companies that went under at the time, all of them were unionized," he said. "I'm not saying this was the only factor -- these firms faced other headwinds such as cheap labor and a strong dollar ... but the unions held them back."
5 "For Joe Soptic, who worked at the plant for 28 years, that meant a loss of $283 per month, about 22 percent of his pension."
6 "After nearly 30 years as a steelworker, Joe Soptic found a job as a school custodian. The $24,000 salary was roughly one-third of his former pay"
For #1: Romney left Bain in 1999, yet the company went bankrupt in 2001, 2 years AFTER HE LEFT. Yet that is still Romney's fault? So we can blame 9/11 on Bill Clinton then?
For #2/3: Bain got $12 million after spending 10 YEARS trying to turn the country around, or $1.2 million/year. Sounds like a lot, but how many people did they employ at Bain to get that? 5? 10? And you're talking about Bain getting $12 million when their overall debt levels were $378 million in 1995! That's only 3% of the total debt, so where did the rest of the 97% of the debt come from? Read below.
#4 Seems strange. Unionized steel companies all went bankrupt when faced with increased foregin competition, but NOT non-unionized? Let's read below to see if we can solve the mystery.
Well let's see here. For #5, Joe Soptic, he lost $283/month in his pension, which was a 22% decrease. So, what was it before? 22% of x = $283, so x=a monthly pension of $1286. I checked what the AVERAGE pension was for private sector workers here: it's $641 (avg pension of $7692/year). So these guys are getting DOUBLE (!!) the pension of the average private-sector worker. Well how about their wages?
For #6: Joe was making $24k, which was 1/3 of his former pay. That means he was making $72,000 as a steelworker. How does that compare? I checked here at the BLS. Result? Supervisors at steel mills get $28/hr, about $44,000 / year. Really? These guys are making $72,000 a year when the HIGHEST PAID in the steel industry is $44,000 / year.
So, John Hawkins in his blog is railing on Romney as the bailout king. He should REALLY be THANKING Romney for trying to turn GS Technologies around and save the company, by working for 10 years with little to show for it, because HIGH UNION WAGES AND PENSIONS ballooned the company's debt levels and made them UN-prepared to face competition.
That should be the REAL story; that Bain, that actually made "an average annual return on investment of 88 percent between its founding in 1984 and the end of 1999" (88% return? Great job, Mitt!) tried to help out GS.
The REAL story should be how Romney helped out another steel company "helped launch and grow an innovative business called Steel Dynamics that is today a $6 billion global leader".
The REAL story was that the company went under in 2001, 2 years AFTER Romney left.
The REAL story was that Bain took out $12 million over 10 years, which was only 3% of its total debt.
The REAL story is that "Bain's track record under Romney as "fantastic,", and "You don't do this by just squeezing out costs. Those kinds of returns only come from growth," he said.
The REAL story is that Bain turned around dozens of companies, how many jobs did that provide? 88% average annual returns!
The REAL story is that I expect the left to lie and distort the facts, that's just what they do. But from the right?
The REAL story should be how the UNION workers were OVER-paid (even compared to the high wages of the steel industry), had EXPENSIVE pensions (double the national average pension), went on strike in 1997, and then managed to COMPLAIN when the company went bankrupt with too much DEBT.
That should be the REAL story that conservatives should be blogging about, the damaging effects of unions and their inability for them and Democrats to see how they BANKRUPT good companies. That Mitt is a solid business leader who tried to combat the high wages of the unions and came away with a rare loss. That Obama is an incompetent fool with no business experience or experience doing ANYTHING. Mitt's track record of making wise business decisions is amazing and should be CHAMPIONED, not TRASHED.
If Bain made 88% annual average return and couldn't overcome the high UNION wages of GS, NO ONE COULD. The company was doomed.
That SHOULD be the REAL story that SHOULD be trumpeted by everyone on the right. It's a shame that it isn't.